The proposed reforms to the CFC rules should significantly reduce the pressure on UK multinationals to leave the UK in order to remain tax competitive. The proposed finance company partial exemption is pragmatic, preserves the UK’s interest deductibility regime and allows UK multinationals to compete internationally while also protecting the UK from the artificial diversion of profits. While no specific regime is proposed for IP holding companies, many such companies, if structured correctly, should be able to rely on the territorial business exemptions or the general purpose exemption.
